So here’s some news that won’t surprise anyone: Amazon is indeed selling its new Kindle Fire tablets at a loss, according to analysts IHS Isuppli. The only surprise is how little the loss has turned out to be; for every Kindle Fire Amazon sells, it loses $10. So as long as each Kindle Fire owner downloads an ebook on their first day, Amazon’s breaking even.
According to Isuppli’s valuations, a Kindle Fire, just in terms of the bits and bobs that physically make it work, costs Amazon $209 to make, while selling for $199. Of course, that’s not taking into account all the other expenses that go into massive international product launches, like the research and development, the marketing etc. but $10 sounds pretty reasonable to us – by comparison, the original PlayStation 3 and Xbox 360 are thought to have lost Sony and Microsoft upwards of $250 per console.
Amazon’s Kindle Fire strategy mirrors that which it uses for its original line of Kindle readers, offering the hardware on the cheap but pushing Amazon’s online store as a user’s primary source of content. But while the Kindle e-readers could only take advantage of Amazon’s ebook store, the Fire tablet will use Amazon for films, TV, music and apps as well, like an even more comprehensive version of iTunes.
We’re still none the wiser on when the Amazon Kindle Fire tablet will launch in the UK, with only vague promises of an early 2012 launch to go on at the mo. We are, however, standing by what we said in our Amazon Kindle Fire features piece: other tablet manufacturers have much to worry about.
Source: The Register